RBA keeps cash rate chilled at 1.5%

The Reserve Bank of Australia has decided to leave the official cash rate untouched at 1.5% for the 27th consecutive month on a backdrop of a continuously expanding economy.

In the monetary policy decision statement, RBA Governor Philip Lowe said the low interest rate is continuing to support the Australian economy.

To support his point, he mentioned that the Australian GDP has increased by 3.4% over the past year, with the unemployment rate dropping to 5% — the lowest in six years.

"The central scenario is for GDP growth to average around 3.5% over these two years, before slowing in 2020 due to slower growth in exports of resources," Lowe said, adding that business conditions remain positive while non-mining business investments are seen to improve.

With regards to the housing market, Lowe said Sydney and Melbourne's continued to ease as nationwide measures of rent inflation remains low.

While credit conditions are tighter than they have been for some time, Lowe said growth in owner-occupier credit remains robust. However, he recognized that the demand by investors has noticeably slowed with the change in the dynamics of the housing market.

"Credit conditions are tighter than they have been for some time, although mortgage rates remain low and there is strong competition for borrowers of high credit quality," Lowe said.